Kahala Mandarin
investor sells share
to majority owner

The hotel now will be owned
solely by Kahala Royal Corp.

Mandarin Oriental International Ltd., the Asian operator of 21 luxury hotels worldwide, said its subsidiary will exercise an option to sell its 40 percent stake in the Kahala Mandarin Oriental Hotel.

Kahala Royal Corp., which holds 60 percent of the Kahala Mandarin, will buy the stake for $94 million. The consideration includes a repayment of $10 million in debt owed to Mandarin Oriental's subsidiary, a statement to the Singapore stock exchange said.

Mandarin Oriental will continue to manage the hotel.

WKH Corp. of Los Angeles, headed by William Weinberg, sold the 368-room Kahala Hilton, as it was then called, in 1993 to Japan-based Kahala Royal Corp. and local developer Bill Mills for an estimated $50 million.

"The post-tax gain on this disposal is expected to be about $36 million that would only be recognized on completion," the statement said. "The sale proceeds received will be applied toward the Group's general corporate purposes, including pursuing its development strategy."

Mandarin Oriental, which is based in Hong Kong and listed in Singapore, is spending $110 million to renovate its main hotel in Hong Kong and adding more in Tokyo, Prague, Boston, Mexico and Hong Kong after returning to profit in the first half of 2004.

The stock has gained 60 percent in the past year, compared with a 13 percent rise in the benchmark Straits Times Index.

The hotel operator said it could only exercise its option to sell the stake between January and March this year, adding Kahala has six months to complete the purchase.

Mandarin Oriental is owned by Jardine Matheson Holdings Ltd., which invests in real estate, distributes cars and runs supermarkets in Hong Kong. The 172-year-old company is controlled by the founding Keswick family in Scotland.

Jardine Matheson has been unloading its Hawaii businesses to focus its business on Asia. In August 2004, it sold the food service division of Theo H. Davies & Co. to California-based Brentwood Associates for a price estimated at between $45 million and $50 million. In 2003, Jardine Matheson sold the six Theo Davies auto dealerships and a repair shop for $100 million.